For the purpose of this subchapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
BUILDINGS.
(1) The town will capitalize buildings at full cost with no subcategories for tracking the cost of attachments. Examples of attachments are roofs, heating, cooling, plumbing, lighting or sprinkler systems, or any part of the
BASIC BUILDING. The department will include the cost of items designed or purchased exclusively for the BUILDING.
(2) A new
BUILDING will be capitalized only if it meets the following conditions:
(a) The total cost exceeds $5,000;
(b) The useful life is extended two or more years; and
(c) The total cost will be more than the current book value and less than the fair market value.
(3) Capital building costs will include preparation of land for the building, architectural and engineering fees, interest cost (while under construction), accounting costs if material, and any costs directly attributable to the construction of a building.
(4) The town will record donated buildings at fair market value on the date of transfer with any associated costs.
(5) Purchases made using federal or state funding will follow the source funding policies and above procedures.
CAPITAL OUTLAY. Expenditures which benefit both the current and future fiscal period. This include costs of acquiring land or structures, construction or improvements of buildings, structures or other fixed assets, and equipment purchases having an appreciable and calculable period of usefulness. These are expenditures resulting in the acquisition of or addition to the governments general fixed assets.
ENTERPRISE FUNDS.
(1) Those funds used to account for operations:
(a) That are financed and operated in a manner similar to private business enterprise where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on an continuing basis be financed or recovered primarily through user charges; or
(b) Where the governing body has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability and other purposes.
(2) The
ENTERPRISE FUNDS of the town shall include the municipally owned water and sewage utilities which shall require enterprise fund account and reporting.
FIXED ASSET. Tangible assets of a durable nature employed in the operating activities of the unit and that are relatively permanent and are needed for the production or sale of goods or services are termed property, plant and equipment or FIXED ASSETS. These assets are not held for sale in the ordinary course of business. This broad group is usually separated into classes according to the physical characteristics of the items (e.g., land buildings, improvements other than buildings, machinery and equipment, furniture and fixtures).
HISTORIC COST. The cash equivalent price exchanged for goods or services at the date of acquisition. Land, buildings, equipment and most inventories are common examples of items recognized under the HISTORICAL COST attribute.
IMPROVEMENTS OTHER THAN BUILDINGS.
(1) IMPROVEMENTS to a land for better enjoyment, attached or not easily removed, and will have a life expectancy of greater than two years.
(2) Examples are walks, parking areas and drives, golf cart paths, fencing, retaining walls, pools, outside fountains, planter underground sprinkler systems and other similar items.
(3) Improvements do not include roads, streets or assets that are of value only to the public. For example, Main Street is a public street with greatest value to the public. Roads or drives upon city-owned land that provide support of town facilities are assets. A sidewalk down the road for public enjoyment is an infrastructure improvement and is not capitalized. However, sidewalks installed upon city-owned land for use by the public and for the support of town facilities are capital assets.
(4) This town will capitalize new improvements other than buildings only if it meets the following conditions:
(a) The total cost exceeds $5,000; and
(b) The useful life is greater than two years.
(5) The town will capitalize improvements or renovations to existing improvement other than building on if the result meets the following conditions;
(a) The total cost exceeds $5,000;
(b) The useful assets life is extended two or more years; and
(c) The total cost will be greater than the current book value and less than the fair market value.
(6) The town’s donated improvements other than buildings will be recorded at fair market value on the date of transfer with any associated costs.
(7) Purchases made using federal or state funding will follow the source funding policies and above procedures.
LAND.
(1) This town will capitalize all
LAND purchases, regardless of cost.
(2) Exception to land capitalization are land purchased outright, as easements, or rights-of-way for infrastructure. Examples of infrastructures are roads and streets, street lighting systems, bridges, overpasses, sidewalks, curbs, parking meters, street signs, viaducts, wharfs and storm water collection.
Original cost of
LAND will include the full value given to the seller including relocation, legal services incidental to the purchase (including title work and opinion), appraisal and negotiation fees, surveying and costs for preparing the land for its intended purpose, including contractors and/or city workers (salary and benefits), such as demolishing buildings, excavating, clean up and/or inspection.
(3) The town will record donated land at fair market value on the date of transfer plus any associated costs.
(4) Purchases made using federal or state funding will follow the source funding policies and above procedures.
MACHINERY AND EQUIPMENT.
(1) An apparatus, tool or conglomeration of pieces to form a tool. The tool will stand alone and not become a part of a basic structure or building.
(2) This city will capitalize and tag items with an individual value equal to or greater than $5,000. Machinery combined with other machinery to form one unit with a total value greater than the above mentioned limit will be one unit.
(3) Shipping charges, consultant fees and any other cost directly associated with the purchase, delivery or set up (including contractors and/or town works (salary and benefits), which makes such equipment operable for its intended purpose will be capitalized.
(4) Improvements or renovations to existing machinery and equipment will be capitalized only if the result of the change meets all of the following conditions:
(a) Total cost exceeds $5,000;
(b) The useful life is extended two or more years; and
(c) The total costs will be greater than the current book value less than the fair market value.
(5) Examples include:
(a) A work truck being equipped with screens, lights or radios for use as a single unit throughout its life expectancy is considered one unit; and
(b) A computer (CPU, monitor, keyboard and printer) is considered one unit.
(6) The town will record donated machinery and equipment at fair market value on the date of transfer with any associated costs.
(7) Purchases made using federal or state funding will follow the source funding policies and above procedures.
TANGIBLE ASSETS. Assets that can be observed by one or more of the physical senses. They may be seen and touched and, in some environments, heard and smelled.
(Ord. 2005-16, passed 9-27-2005)